24 Wash. 371 | Wash. | 1901
The opinion of the court was delivered by
Appellant commenced suit to enjoin the collection of a tax of $256.60, levied upon its capital stock, assessed at a valuation of $10,000, for the year 1897. The complaint substantially states that appellant is a domestic corporation with a capital stock of $250,000. The corporation was formed for the purpose of acquiring and conveying water by conduits through pipes and canals on
1. Relative to the first ground of demurrer, it may be
2. The complaint is not so clear in its statements as it should be, but its allegations, taken together and as "understood by counsel for both parties, seem to sufficiently charge that the assessment levied upon the capital stock of the appellant corporation is void; that the corporation having been duly assessed upon all its property, both real . and personal, the valuation of the capital stock could not be added thereto. It is alleged that the capital stock, ; or the proceeds, is invested in the real and personal prop- ' erty assessed. It is true that counsel for respondents criticize the language of the complaint as not averring properly that the capital stock is invested in all the property. We think, however, as against a general demurrer, the allegations must be taken to state this fact. It is maintained by counsel for appellant that in the assessment of the shares of capital stock of a domestic corporation, where the property is all assessed to the corporation in which such capital stock is invested, a duplicate assessment and double tax is levied. We think this is correct. Judge Cooley on Taxation (2d ed.), p. 225, observes of double taxation:
*375 “The same may be said of a tax on the property of a corporation and also on the capital which is invested in the property; if the latter is taxed as property, this also is duplicate taxation, and as much unequal as would be the taxation of a farmer’s stock by value when on the same basis it is taxed as a part of his general property. When, for instance, the money paid in as capital of a manufacturing corporation has been invested in buildings and machinery, these are what then represent the capital, and to tax the capital as valuable property distinct from that which then represents it would be to tax a mere shadow; it would be to make the shadow stand for the substance in order that it might be taxed, when the substance itself is taxed directly under its own proper designation. We do not speak here of a taxation of the prop-' erty and also of the franchise, those being two things, ' »
To the same effect is the rule applied in People ex rel. Burke v. Badlam, 57 Cal. 594. The court, by Judge Ross, observed:
“Row, what is the stock of a corporation but its property — consisting of its franchise and such other property as the corporation may own ? Of what else does its stock consist ? If all this is taken away, what remains ? Obviously nothing. When, therefore, all of the property of the corporation is assessed — its franchise and all of its other property of every character — -then all of the stock of the corporation is assessed, and the mandate of the constitution is complied with. . . . The share of each stockholder is undoubtedly property, but it is an interest in the very property held by the corporation. It is his right to a proportionate share of the dividends and other property of the corporation — nothing more.”
Referring to this case with approval, the same court, in Spring Valley Water Works v. Schottler, 62 Cal. 69, reaches the conclusion that when the law,is complied with by assessing all the property of the corporation, which property includes the franchise of the corporation, to as
“While the legislature may so adjust the revenue system as to occasion double taxation, such taxation will not be inferred unless necessarily imposed in carrying out the law.”
The list made up by the assessor under our revenue law is upon the valuation of property. We think, when all the property into which the capital stock of the corporation entered was assessed, the valuation of the corporation’s property was complete. At the present stage of this suit we have no information beyond the statement that all the real and personal property was assessed. In the case of Ridpath v. Spokane County, supra, the statute for the assessment of. the property of domestic corporations in the state was set out, and it was there determined that the capital stock of such a corporation whose property was assessable in the state could not be assessed to the individual stockholders resident in the state. It was there observed of property assessable to such a corporation:
“This includes both tangible and intangible property. The tangible property may be valued in connection with its use with the .intangible.”
It has been repeatedly determined that the corporate franchises must be assessed to the corporation. . Commer
But it is not contended by counsel for respondents that this tax is on the franchises of the company, though it is intimated that the tax might be upon other property of the company than real and personal property listed, and that the assessor’s listing of the capital stock for assessment may he merely an erroneous classification, and not to the prejudice of the appellant. It is not, however, disclosed in any way that this assessment is not upon the capital stock, in addition to the other property which was properly assessed. The implication fairly deducible from the complaint, and which we have accepted, raises the question of the validity of the assessment upon the capital stock as such, and in addition to the other property of the company. It is true that, in the assessment of corporate franchises and privileges and intangible property, the assessor may properly examine the amount and value of the capital stock. It should be returned to him by the proper officer of the corporation for his information. One method of the valuation of the intangible property of the corporation, and a very fair one, is the market value of all the capital stock over and above the value of its tangible real and personal property. This method is approved by high authority. Cooley, Taxation (2d ed.), p. 230, and authorities cited in the margin; Spring Valley Water Works v. Schottler, supra.
But, as we have seen, the assessment of the capital stock of a domestic corporation which has all its property in which the capital stock is invested already assessed- is duplicate taxation, and this latter result will not be inferred without specific legislation. It may be further
The judgment is reversed, with direction to overrule the demurrers to the complaint, and for further proceedings in accord with this opinion-.
Dunbar;, Fullerton and Anders, JJ., concur.